How The $3 Billion Web Video Business Is Supplanting TV Advertising

Who watches TV, on actual TVs, anymore? Sometimes, it feels like no one. In fact, most people do still watch traditional television when they are seeking longer viewing experiences, but that is quickly changing.The trend has been towards a broader mix of screens that people turn to for video consumption. Everything from smartphones to tablets to PCs to television are suitable for watching a video of any length.

With this in mind, advertisers are moving significant dollars to new digital platforms, and seeking formats that move beyond the basic website banner ad, to find ways to engage with audiences by creating sharable content.

Based on research from Nielsen, Forrester, ComScore, and BI Intelligence, this slideshow gives an overview of how web video that is being viewed on connected devices is impacting traditional television and the advertising landscape.

How big is online video? According to Nielsen, currently, around 164 million people watch online video monthly.

YouTube has 3 times more views than any other online video site.

However, most of those web videos are very short — viewers still seem to be spending the most time on connected TVs.

But, when it comes to web video, Netflix demands significantly more time per view from users than any other site.

Users staging their own full-season TV show viewing marathons are to blame. In the past year, users have increased their TV show viewing on Netflix by 9%.

The viewing of movies, and video content on Netflix generally, is in overall decline.

Though people are spending more time online watching video, Nielsen reports that 94% of video watching is still on TV.

That said, Nielsen also reported that 500,000 TVs have been cut from American homes, and replaced with mobile devices. This is why:

So, it is not surprising that cable TV subscriptions are trending down.

50.4% of people own a smartphone, and 36 million mobile phone owners view video from their phones, according to Nielsen.

And, while we used to quantify the number of TVs per household, we now look at the spread of connected devices.

From this this slideshow by Nielsen covering their research on video advertising.

So, advertisers can no longer think in terms of a single channel when it comes to video. According to BI Intelligence, online ad spending overall is just 4 percentage points behind television in share of ad dollars.

The money is following the audience: 9.6 billion video ads were viewed in July 2012, with each of the top four video ad properties delivering more than 1 billion video ads each, according to ComScore.

Then in August 2012, Video ads reached 52 per cent of the total U.S. population an average of 61 times, ComScore said. Hulu delivered the highest frequency of video ads.

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These are the biggest web video advertisers right now. Many have of them have created commercials that go viral and thus don't require paid placements.

Looking ahead: Forrester recently estimated that video advertising spend will triple to more than $9 billion by 2017.

Now take a look at one of the most controversial web video ads of the year ...